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Why Nice Landlords Lose

Finding the right property management style can be difficult for real estate investing businesses.

It’s a little like managing any other business whether a restaurant or retail store, only with a lot more on the line if things go badly.

With buy and hold real estate investing so popular at the moment there are more green landlords out there than ever before. With so many foreclosures there are also a ton of new tenants. However, smart real estate investing pros know that longevity of individual tenants in their properties plays a massive role in profitability.

Constantly changing tenants normally means additional leasing costs, time to show properties, more clean up and repairs and marketing expenses, not to mention periods when no money is coming in the door. Customer service is paramount as a landlord but being too nice can be equally dangerous and unprofitable in the end too.

Make allowances sure. Don’t put a cowboy property manager on-site who throws his weight around for the tiniest thing to satisfy his Napoleon complex and lose good tenants However, being too nice will often mean being taken advantage of, even by those who start out as the best tenants with the best intentions.

Being a ‘walk-over’ when it comes to tenants demanding repairs and upgrades can be extremely costly. Make sure any property manager you hire knows their boundaries too. They can’t fold and give into giving everything away to tenants or you are going to end up in a negative real estate investing cash flow situation.

If you are too nice and are not aggressive enough about rent collection tenants will take advantage. Even if you don’t need the money it should be demanded on time or proper protocol for evictions should be followed. Otherwise tenants will get used to you not caring, think you are too rich and don’t need the money and end up getting behind. Once they get behind there comes a point when it just makes more financial sense for them to move somewhere else instead of catching up.

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